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Living costs on the up for retirees

Living costs for retirees saw a slight increase over the September quarter and most superannuation balances remain below the amount required for retirement, according to the Association of Superannuation Funds of Australia (ASFA).

According to the latest figures from ASFA, there was a modest rise in the cost of living for retirees in the September quarter, with couples aged 65 or older now requiring $58,915 per year and singles needing $42,962 per year.

Both categories increased by 0.2 per cent for both comfortable and modest lifestyle levels.

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Based on the ASFA research, the most significant price rises in the September quarter were international holiday travel and accommodation, which rose 4.6 per cent; fruit, which rose 8.2 per cent; and property rates and charges, up 4.6 per cent.

Price rises were also seen for health services, namely pharmaceutical products, up 0.7 per cent, and medical and hospital services, up 0.2 per cent.

ASFA chief executive Pauline Vamos said while seeing only a minor increase in living costs was good news for retirees, the sums required are still higher than the average balance.

“Saving enough to meet these costs may be challenging for those that are yet to retire,” said Ms Vamos.

"In order to achieve a comfortable standard of living in retirement, an individual requires a minimum of around $545,000 and a couple around $645,000.”

Ms Vamos said saving an adequate amount for retirement is likely to get harder rather than easier in the future as governments respond to the ageing population by looking for ways for individuals to make greater private contributions to health and aged care.

"Surveys of the population show that most [people] who have not yet retired want to achieve at least the ASFA comfortable level of lifestyle in retirement,” she said.

“Currently, only about 20 per cent of retirees reach that living standard but if there is an increase in the superannuation guarantee to at least 12 per cent of wages and we see further voluntary savings by individuals, it should be possible for 50 per cent or more to reach that level."

Ms Vamos indicated it is essential that the impact on final retirement outcomes be considered in any changes to the taxation of superannuation

"We should not mortgage the future living standards of retirees in order to deal with short-term budget challenges of governments,” she said.